Australian coking coal prices have held mostly steady this week after the steep decline following China’s informal ban on Australian coal imports from October 12.
Australian coking coal shipments are struggling with supply glut
China’s verbal notice to halt imports of Australian coal distorted the spot market with China-bound Australian coal cargoes being offered elsewhere at discounted levels as China-based importers became obliged to source coking coal from non-Australian origins.
Oversupply concerns loom large amid continued selling pressure on Australian coals as spot demand in Southeast Asia and India stayed weak with buyers remaining on the sidelines hoping that offers could fall further in light of the current market weakness.
Australian coking coal prices could fall further on excess supply
In response to the import restrictions in China, more of Australian coking coal is targeted toward Japan, India and South Korea.
But while Japan’s crude steel production in October-December is projected to fall by almost 11% to 21.1 mn t from a year earlier, India’s steel demand is predicted to face a sharper decline notwithstanding moderate recovery from automotive and white goods sectors, and government infrastructure projects.
Besides, it is doubtful as to whether ex-Chinese purchases of Australian coking coal can lend much support to spot prices thereof.
This is because a majority of the Japanese and Indians only buy small volumes of seaborne coking coal from the spot market as the country’s largest steel manufacturers source coking coal through fixed-price long-term contracts.
Australian coking coal prices are hence likely to be adversely affected in the short term, though demand has been picking up from key importers outside of China, viz. India, Japan and South Korea.
India Coal Import Shipment Vessel Lineup
CoalMint’s latest vessel lineup data (as on 4th Nov’20) reveals that a total quantity of 1,787,897t of Australian coking coal is expected to reach various Indian ports by 30 Nov’20 incl. 410,000t at Dhamra (Odisha), 229,784t at Gangavaram (Visakhapatnam) and 290,500t at Haldia (West Bengal).
Price Assessments
Latest prices for the Premium HCC and the 64 Mid Vol HCC grades are assessed at around $108/t and $99/t FoB Hay Point, Australia.
For Indian buyers, these prices amount to $119/t and $110/t respectively on CNF India basis.
Australia-India dry bulk freight rate is currently assessed at $11.10/t for delivery by Panamax vessel class.
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